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Stated Income Commercial Lenders - Private Capital Investors

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Stated Income Commercial Lenders - Private Capital Investors

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Stated income loans are one of our most popular commercial loan programs. What makes these so popular? For starters, the fact that no tax returns are required, no W-2's, and it's easy to qualify for. As you already know, banks are currently quite tight with their income requirements when it comes to investment properties. Many investors and business owners simply cannot qualify for a bank loan due to these strict requirements and the ever increasing demand for supporting documentation.

However, with a stated income commercial loan, these same investors and business owners can often qualify for the funds they need without the need to jump through a bunch of hoops, and provide the mountains of paper-work typically required by typical bank loans. An additional attractive feature of the stated income loan is the 30 year fully amortized term with no balloon.
Let's take a closer look at the details of a stated income loan:

No tax returns - Ever! That's right. We don't care what your tax returns show. No DTI (Debt To Income Ratio) review to worry about!

Previous Bankruptcy Ok - So long as the bankruptcy was 2 or more years ago, this will not prevent you from qualifying

Less than perfect credit Ok - Things happen... That's life right? Not everyone can maintain a perfect FICO score. With our commercial stated income loan, you can still qualify with a mid-score as low as 650!

Loan amounts range from $1,000,000 to $5,000,000

Refinance up to 75% of appraised commercial property or investment residential value

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Stated Income Commercial Real Estate Loans - Private Capital Investors

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Our experienced advisors help to get stated income loans, bridge loans and other commercial real estate loans at the lowest rates. We help you to a variety of commercial real estate loans with easy & quick processing, flexible payments & no hidden charges.

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Is It Possible To Get Stated Income Loans - Private Capital Investors

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Is It Possible To Get Stated Income Loans - Private Capital Investors

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Is it Possible to Get Stated Income Loans

Most people when they think of investing in real estate, they always begin with filling out massive paperwork and going through piles of documents to make an ideal case for getting the loan, or even a mortgage. Today, when we look back, it is difficult to imagine that there indeed was a time when people could get a mortgage without having to show any real income proof.

Up until 2007-09-which introduced us to financial crises-, that was the case. Several borrowers depended on stated income loans -also known as income statement loans-which are ideally property loans and given without any income proof.

Before the law became stricter, these mortgages were thoroughly leveraged by lenders and borrowers alike. In some scenarios, it was also observed that some investors were talked into these loans even when they had no requirement.

Today, it is illegal to obtain a loan without any income proof. Of course, we have hard money loans, but then again you need to keep a collateral property there until you repay your loan to the lender.

Stated Income Loan: What is it?

Several years back, a stated income loan was introduced. This loan facility was unique, it did not require borrowers to absolutely no proof of their income apart from the applicant submitting a standard form mentioning their income. There were no checks performed on the same. When this facility rolled out, it is extremely popular with the self-employed people and people who did multiple jobs and found it difficult to show one source of income.

As these loans started gaining recognition, it reached to people who never had any means to repay the loan, that is when all hell broke loose. Income stated loans garnered too much attention and began to be known as 'liar loans'.

The biggest problem in this loan system was the miscalculation of the borrower to understand or inflate their income for repayment. This would eventually lead to massive debt and a growing interest rate. Therefore, when it came to financial crises, asset mortgages played a bigger role. These loans led to people being in enormous debts that they could never afford to repay.

Eventually, people defaulted and the ripple effect of this led to financial crises.

Stated Income Loan: Can we get this loan today?

The age-old method of borrowing funds without income proof is long gone. Today, getting a loan from a bank or any other financial institute requires you to submit documents supporting the fact that you are eligible for a loan. Documents that include credit history, assets, debt history, ongoing loans, and employment proof. People who are self-employed have to start right from the basics by submitting their tax returns (for the last two years) and proof of their regular cash flow.

However, there are loans similar to stated income loans, which will definitely require you to submit the necessary documents, but the amount of documentation will vary for every loan. Many professional lenders will work on a business or personal bank statement instead of looking at your tax returns. This option is preferred by self-employed people because usually, they don't have their tax returns in place.

These loans are usually known as the alternate loans, bank statement loan, or alternate income verification loan. Yes, here too you have to provide your bank statements. However, not all of your documents will be verified by the lender. As compared to traditional bank loans, these loans are easier to get.

Lenders who work with providing such loans are known as 'non-QM' or non-qualified mortgage lenders. Being labeled as non-qualified loans does not pay this mortgage a bad option, but these loans can never be given or sold to Freddie Mac or Fannie Mae.

Similar to most loans, look around. Even when it comes to bank loans, take the opinion from at least three lenders to understand the deal you are getting. Lenders will provide you with accurate loan estimate documents within a couple of working days once they receive your application. The document will highlight the fees and costs that will be associated with your loan, along with interest rate, closing amount, and monthly payout.

Stated Income Loans for Real Estate Investors

Stated income loans have been quite popular with real estate investors as well. The income documentation law is simple, it is only applicable to mortgages for properties that are owner-occupied. Meaning, real estate investors can take mortgages for their investment properties without providing any documentation for their income. Moreover, a few lenders may also underwrite mortgages depending on the expected income generated from the property.

Stated Loans: Alternate underwriting standards

Even though you are a real estate investor, authentic lenders will only consider your existing income to the quality you fit for the loan. When issuing traditional mortgages, the expected income from rental will not be considered. Depending on these qualification rules, sometimes real estate investors struggle to get a loan.

However, today not many investors are stringent about submitting income documents. The law 'ability to repay' is not applicable to investors. Therefore, many lenders have started issuing investment loans on the estimated property returns. These loans are known as cash flow loans because lenders always underwrite the loan depending on the estimated cash flow.

Finding cash flow loans for investors

The moment the lender gets a rough idea of how much your property will make in the future, they will issue a cash flow loan. Ideally, they try to find out if the rent will exceed the expected property debt, and they will gladly issue the loan. However, every cash flow mortgage for the investors will be for 30-years, but often they come with adjustable rates.

When issuing cash flows, lenders will not consider the expected property value changes. Lenders need an assurance that they would be able to make money from rents, so these loans are considered best for holding or buying investors.

Many lenders will create a cash flow trajectory without any considering any inputs from the borrower. Although they will do thorough market research for factoring the stability and value in the rental market. Above cash flow, lenders will also consider the down payment size that is attached to the rental property, investor credit history, the kind of property they are buying.

To begin with, investors will have to invest a minimum of 25 percent on the property, but lenders may ask for a higher down payment. Also, investor loans come with higher interest rates as compared to the rates of traditional mortgages. Currently, the lowest rate on investor loan is 6 percent, but it can tend to go higher.

Even if you have to offer a heftier down payment, the challenge is finding the lenders willing to issue a cash flow. Also, before you opt for this loan remember that cash flow loans are often available to professional property managers or someone who comes with an extensive history in real estate. Before you freeze on one lender, ensure that you have spoken to a few of them before you make your decision.

Stated Income Loans: Will it work for you?

Stated income loans may be a convenient option of the past, but new underwriting innovations do exist, which offer a breather to people who want to opt for this loan. Underwriting loans bring in a higher interest rate, but for people in need, these loans do make a lot of sense. Upon careful research, you can find a loan that fits your requirement and also offers certain protection laws as other loan systems.

Before you seal the deal, do your own income calculation and have a realistic idea of this loan system will work for you and whether you will be able to pay it back on time. Because honestly, no one wants to be stuck with higher interest rates.

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Is it Possible to Get Stated Income Loans - Private Capital Investors

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Most people when they think of investing in real estate, they always begin with filling out massive paperwork and going through piles of documents to make an ideal case for getting the loan, or even a mortgage.

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Rapid Growth In Commercial Mortgage Bridge Loan Market - Private Capital Investors

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Rapid Growth In Commercial Mortgage Bridge Loan Market - Private Capital Investors

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Rapid Growth in Commercial Mortgage Bridge Loan Market | Private Capital Investors

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Regardless of whether you are a savvy commercial real estate investor or have just entered the real estate market very recently, you would have probably heard that the market of commercial mortgage Bridge loan is rapidly growing and that's great news for many people! Finding...

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What Is Commercial Stated Income Loan & How Do You Apply? - Private Capital Investors

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What Is Commercial Stated Income Loan & How Do You Apply? - Private Capital Investors

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What is Commercial Stated Income Loan & How do You Apply?

There was a time in the history of real estate industry when the borrowers of a debt could easily get their loans financed by applying for a Commercial 'Stated' income loans.

These loans were made easily available to the loan borrowers where only 'Stated' income of the borrower is considered and not the actual income as they do not verify the income sources!

Having a verified income may not be a cakewalk for everyone and some of them find it extremely challenging to finance a loan based on their actual income (Like the self-employed professionals or freelancers who do not have salary slips).

The easiest option for such people was raising a loan by applying for a 'Stated' income loan.

But in the year 2008, the housing market crash had an adverse effect on stated income loans.

The Dodd-Frank act that was passed in 2010 further heavily regulated the banking and private lenders' policies leading to the downfall of stated income loans.

This changed the trend of availing stated income loans and the industry of commercial real estate saw many changes during this change.

This continued for many years until the year 2015 when the stated income slowly started entering the market again!

And now, in 2018, you'll find both banks and private money lenders who are ready to finance stated income loans.

So, it is good news for all those who have a hard time in applying for a loan that requires the borrower to have verified sources of income.

Here are some fundamental things you need to know to understand the nature of commercial stated income loans better which help you in your decision making.

What are the advantages of financing a stated income loan?

1) Very little documentation

Unlike the conventional loans, stated income loans do not require too many documents to be submitted at the time of applying for a loan.

You don't have to submit your income tax returns or any other details of your earnings.

Documentation is one of the biggest limitations to many people who are willing to purchase a commercial real estate.

With stated income loans, you can easily tackle this problem and get your loan approved.

2) Quick processing time

In the game of real estate, time becomes the greatest essence sometimes.

When there's the best deal for you and you really want to buy a property and have no cash, you would not have the patience to wait for your loan approval which would take days together for processing in case of conventional loans.

When you know that it's the best time to buy a real estate property and you have no means of raising immediate funds, don't blame it on your fate or luck!

All you've got to do is think about stated income loans. The processing time here is much lesser thus giving you the time benefit.

So even though your credit score is impressive and you can, if you wish to, get a conventional loan, it's always better to apply for a commercial stated income loan in case of urgency in raising funds.

3) No income verification is required

When you apply for stated income loans, banks or your private capital provider would not demand income verification.

This not only saves time but also keeps at bay the unnecessary verification processes with a lot of paperwork and questions. Hate paperwork and verification processes?

If yes, stated income loans are tailor-made for you. Especially if you're self-employed professional or a person who works on a contract basis and do not have a fixed source of income, or have multiple sources of income coming from different people having inconsistent trends, stated income loan is the best loan for you.

4) High Loan-To-Value rates

Stated income loans provide 70% LTV rates which is comparatively very higher than other types of loans.

The LTV rates may vary from bank to bank and lender to lender, but the rates bracket, however, remains between 60-70% only.

5) Most stated income loans do not have pre-payment penalties

If you spend a little time checking the features of different stated income loans issued by different banks and private lenders, you will come across some loans that are free of prepayment penalties.

This is a great benefit because when you have sufficient funds to repay the loan, you easily may do so without having to worry about how much money you'll be spending extra in the guise of prepayment penalties.

While you're applying for a loan, this factor may not be on your checklist. But at the time of repayment of your loan, you'll land in trouble if you don't consider prepayment penalty rates.

They were some of the pros of availing stated income loans. When you're taking a call on what type of loan to rise, you should also know the disadvantages of raising it so that you can make the best decision.

Here are some major disadvantages of availing stated income loans. Take a final call only after weighing both pros and the cons of raising a commercial stated income loan.

Disadvantages of stated income loans

1) High mortgage rates.

Well, this one goes unsaid I guess. Since the stated income loan is not based on your actual income or you're earning capacity (As they do not conduct any income verification process), it's quite obvious that they charge high mortgage rates.

Also as these loans are processed in much lesser time, it's a high-risk loan for the loan providers, be it banks or private loan lenders and thus high mortgage rates are charged.

2) Stated income loans cannot be processed if you want more than 70% of the total purchase price.

Due to the high-risk factor involved, these loans will not be issued if you want more than 70% of your total purchase price. This can be a major issue if you want to pay 90% of the purchase price to the property sellers.

3) High Down payment requirements

The down payment requirements for stated income loans are not anything lesser than 30% of the total loan value.

This can be a huge amount in case you don't have sufficient funds. On the other hand, other types of loans do not require such high down payments making it easier for you to avail the loan.

Weigh the pros and cons of commercial stated income loans in the might of your needs, requirements, and limitations before taking the final call. Once you've made up your mind for availing stated income loans, here are some requirements that you need to fulfill for availing the loan.

Requirements for stated income loans

1) A good credit score to begin with

Since the stated income loan does not require an income verification process, the least the loan providers can ask for is for you to have a considerable credit score.

The banks or private money lenders who finance commercial stated income loans must believe that you the capacity to repay their loan and this can be done only if they have trust in you.

The credit score judging criteria differ from one bank to another and one private lender to another, however, the main criterion remains the same - Your previous loan repayment history!

They don't need your salary history or income history but yes, they surely are interested to know your loan repayment history.

2) Bank statements

As stated income loan providers do not ask for your tax returns or your previous income history, they have very less idea about how much you're actually earning.

So it's their policy to ask your bank statements having details of previous 2 to 4 months' transactions to have a wild guess on your loan repaying capabilities.

3) Ability to pay high down payments

Unlike other conventional loans, stated income loans require high down payments.

So you must be in a position to arrange such high down payments in order to be qualified for availing stated income loans.

This can come from your savings or other refinancing options. But what you must remember is that your loan application for stated income loans would be rejected straight away if you don't have the ability to pay the down payment immediately.

The last question - How to apply for stated income loans?

Stated income loans can be applied by a very simple process as it requires minimal documentation.

All you've got to do is to fill up the application form for stated income loans and the banks or your private lenders will decide if you're eligible for availing the stated income loan.

Once the loan is approved, you've got to submit your bank statements along with the down payment and loan fees to avail your loan.

Don't forget to go 'Window-shopping' of different banks and private lenders to get the best rates and terms for your commercial stated income loans.

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What is Commercial Stated Income Loan & How do You Apply? | Private Capital Investors

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There was a time in the history of real estate industry when the borrowers of a debt could easily get their loans financed by applying for a Commercial 'Stated' income loans. These loans were made easily available to the loan borrowers where only 'Stated' income...

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How Stated Income Loans Help Self-Employed Borrowers - Private Capital Investors

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How Stated Income Loans Help Self-Employed Borrowers - Private Capital Investors

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How Stated Income Loans Help Self-Employed Borrowers

As compared to all the different types of borrowers, the Self-Employed borrowers stand different because of their different nature of income earnings. Not all banks, lending institutions or private lenders are very keen on lending loans to self-employed borrowers, and the biggest reason behind this is their fluctuating nature of earnings which prevents these institutions lay trust on self-employed borrowers.

Does that mean it's challenging for self-employed borrowers to raise a loan? Well, difficult yes. Impossible? No. Stated income loans are the most significant rescue for self-employed borrowers and can help a great deal in financing the deals of self-employed borrowers. So, if you are a self-employed borrower, here's everything you need to know about stated income loans and how they can help you in financing your deals or investments. Read on!

What are the stated income loans?

Covering up the basics first - What are Stated Income loans? Stated income loans in its traditional sense are the loans that were issued, as the name suggests, based on the 'Stated Income' of the loan borrower. However, unfortunately, these types of loans caused great havoc in the entire economy and was in a way responsible for the 2008 Housing market crash, after which the banks stopped providing such loans based on the "stated income" of the borrower.

In today's sense, therefore, stated income loans are the loans that are provided on the basis of the credit score and credit-worthiness of the borrower over the stated Income. Thus, you will no longer need proof of verified stated income reports or huge documentation to apply for a stated income loan. You'd instead need a good credit score to obtain a stated income loan.

What are the cases where stated income loans make the most sense?

* When you're a self-employed borrower, here are some scenarios where opting for a stated income loan makes the most sense.

* When you do not wish to shell out all the cash that is needed to finance a particular deal and want to opt out for a loan instead, so you have some of your savings with you in cases of emergency or even just in general, as a measure of basic survival security.

* When you're planning to flip a particular property from your portfolio to sell but need some immediate cash financing to renovate the building and increase the chances of a great sale transaction.

* When you have a significant cash advance that is coming your way in the future, but you cannot pass out on a particular type of investment or property

These are some of the typical cases where it makes the best sense for you to avail commercial stated income loans.

What are the things needed for you as a self-employed borrower to avail a stated income loan?

Before we talk about the things that are needed for you as a self-employed borrower to avail a stated income commercial real estate loan, here's an overview of how the scenario would be different for employed borrowers. So, employed borrowers would be typically needed to provide the documentation of their W-2 Forms, tax returns, and some recent pay stubs to qualify for a typical mortgage loan. However, for you, as a self-employed borrower, you'll be expected to submit a little more documents as your income flows are irregular or inconsistent, and that leaves the lenders at the higher risk stage. Here are the things you will need as a self-employed borrower to avail commercial stated income loans.

Number 1 - Huge amount in savings or reserves

Since the Income of self-employed borrowers vary and are inconsistent, the lenders usually require the borrowers to have a huge amount of savings in their bank accounts. This assures them that they are covered and they won't run into losses even at times, the borrowers' monthly Income has taken a beating. So, if you're a self-employed professional looking out for a loan, you need to ensure that you have a considerable amount of savings in your bank account.

Number 2 - Huge down payments

The down payments for employed borrowers will be much lesser than the down payments a self-employed borrower would have to make. Again, the biggest reason behind this is the insecurity of the lenders with their money with you owing to the inconsistent income pattern that you may have. The down payments vary from one lender to another, and one lending institution to another. You might want to do your homework on the best of the best lenders out there to land upon a great deal. There are plenty of stated income commercial lenders out there and making a wise pick among the various choices that are laid out in front of you will surely require a fair amount of research to develop sufficient knowledge about what you're getting into.

Number 3 - High credit score

A High credit score is one of the prime requirements for availing commercial stated income loans. If you don't have a remarkable credit score, it is almost impossible for you to get your hands on an excellent stated income loan. There are some ways through which you can, however, increased your credit score and then apply for these loans later. So, ensure that you have an attractive credit score before you apply for a stated income loan. Typically, you will be required to have a credit score of anything above 900 to qualify for stated income commercial real estate loan.

On the other hand, also remember the overall credit-worthiness of the borrowers is also considered while processing the loan request for providing stated income commercial real estate loans. So, even in cases where the credit score of the borrower is not up to the mark, you can always try getting into a conversation with your lender and convince them of your credit-worthiness.

This might require you to build a strong rapport with the borrower, demonstrate them about your earning abilities through showing your recent earnings, demonstrate to them on why they can count on you with respect to paying back your dues, and finally demonstrate to them on how important this deal is for you and how solid is your plan of getting this deal executed by making the highest returns.

Using this approach of building a good rapport with the potential stated income commercial lenders and building up your credit worthiness therefore might not be the most commonly approached method or the most mainstream one, but it is definitely worth a try as you'll never know how lenders will respond and to your surprise, you might strike a great deal with any one of those stated income commercial lenders.

So, please do not close the doors on yourself unless they totally have! This approach is instead an unconventional way of getting your hands on stated income loans, but you should try it when you're turned down by some of the lenders. The fact of the matter here is that all that is stopping lenders from lending you your loan is that they cannot trust you with the loan repayments on time due to the nature of your work.

This right here is their biggest hurdle that's stopping them from providing you a loan. If you can do anything to remove this hurdle, and somehow manage to convince your lender that you will be paying up on time and prove your credit-worthiness to them, then there's nothing like it, and most importantly, there's nothing wrong about it.

Number 4 - High level of Income

The next necessary requisite for you to avail a commercial stated income loan is a high level of Income. As it is, it is apparent that self-employed borrowers do not have a fixed cash flow every month. Thus, the lenders expect the borrowers to have a high level of Income - meaning the services provided by the self-employed borrower or in general the business conducted by the borrower should be of a nature that promises a high level of Income.

When it comes to a high level of Income, you need to note that sometimes lenders turn down the loan request of self-employed borrowers even when the savings are huge because lenders are more keen on knowing your repaying abilities than your old savings. So, if you're into a business that does not promise a high level of Income, it is very challenging for you to avail a stated income loan.

Number 5 - Bank statements of the borrower

Lastly, lenders will need your bank statements to believe that you have a regular income stream, if not consistent. The bank statements pertaining to the period of the last 3 to 4 months is what is typically needed to be submitted with the lenders. Again, your bank statements aren't really of primary importance as lenders are more interested in the savings you have made till date and your overall credit score and credit-worthiness that you display while negotiating the deal.

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How Stated Income Loans Help Self-Employed Borrowers - Private Capital Investors

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As compared to all the different types of borrowers, the Self-Employed borrowers stand different because of their different nature of income earnings. Not all banks, lending institutions or private lenders are very keen on lending loans to self-employed borrowers, and the biggest reason behind this is their fluctuating nature of earnings which prevents these institutions lay trust on self-employed borrowers.

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Stated Income Loans For Self-Employed Borrowers - Private Capital Investors

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Stated Income Loans For Self-Employed Borrowers - Private Capital Investors

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Stated Income Loans for Self-Employed Borrowers

Wouldn't it be amazing if you could get a loan approved without having to provide any income verification or proof of documentation? As a borrower, you might say yes.

But as a lender, lending money to borrowers without verifying their income can be very risky. Stated income loans were Commercial real estate loans provided by lenders based on the income that was "stated" by the borrowers without conducting any income verification process.

They were around for a while across the States until the Housing Crash of 2008 happened. One of the main contributors to the Housing market crash of 2008 was Stated Income loans.

It had left the economy shaken with so many properties in disputes and even more lenders in huge loss where most borrowers became bankrupt.

Thus, the government had to interfere and stated income loans flushed out of the market. Policies were made more strict, both banks and private money lenders were now required to provide loans only to those who have stable income sources and could provide proof of such income.

In fact, for a few years, even taking the name of "Stated Income Loans" became a taboo with absolutely no or close to zero lenders lending such loans.

However, the Frank-Dodd Act of 2010 changed the date of Stated Income Loans for good. With this Act, Stated Income Loans were back into the market - only that they had changed in some ways.

Today, you can get a stated income loan both from banks or private money lenders, but not on the sole basis of what income you "state" but based on a few income verification proofs like bank statements, a good credit score, and huge down payment.

This blog is an overview of stated income loans for self-employed borrowers who do not have a regular or stable source of income. If you're a self-employed borrower, the best type of commercial real estate loan for you could stated income loan. Read on to know why.

What are the qualifying conditions for average-employed borrowers to secure a conventional mortgage?

An average-employed borrower would need to provide W-2 forms, tax returns, pay stubs pertaining to the last 12 months and sometimes, bank statements in order to qualify for a conventional mortgage.

What are the qualifying conditions for a self-employed borrower to secure a stated income loan?

As a self-employed borrower, it can be daunting to find the right place to fund your real estate needs as most banks and other traditional lending institutions turn down the loan requests due to unstable income flow. On the other hand, you might feel skeptical about sourcing your loan from a private money lender.

However, you must note that there's a good number of savvy Commercial real estate investors who've made it big only by having a trusted circle of private money lenders.

So, as long as you know how to choose the right lender for you, you cannot get this wrong. We've shared some tips on choosing the right kind of lender for you in the latter part of this blog.

As a self-employed borrower, here are some things you need to check off your list to qualify for a stated income loan:

Bank statements related to the past 12 months - Lenders do not require cumbersome income verification, and all they'd expect from your end is to submit your bank statements. That's the least they can ask for as they're taking up the risk of lending without asking any other kind of income verification. These are needed for lenders to rest assured about the recovery of their loan.

Huge down payment - As the risk is on the higher end for your lenders, you will generally be required to make a large down payment before your loan can be processed. A median percentage in the market would be 20% of your property value. This is also done so that lenders are assured of your commitment towards your home and knowing that you have 20% equity in your property definitely sounds peaceful.

Vast reserves or savings - The next obvious thing your lenders might expect from you is to have vast reserves or savings. This assures them of final recovery at a worst-case scenario where you aren't paying your loan liabilities on time. They might not ask you to back it up with the relevant documentation. It again depends mostly on the kind of private money lender you choose to work.

Higher rates - This is a no-brainer. The prices on the commercial stated income loans are higher than their conventional loan counterparts.

A good credit score - the Last thing on the list would be a good credit score. It needn't be a "great" one though (if it's "great," more often than not, you shall easily qualify for a more conventional type of mortgage). A decent credit score of around 600 points should be good enough to convince your lender to approve your loan request.

These are the general qualifying conditions for a commercial stated income loan for self-employed borrowers. If you don't think you satisfy all the terms stated above, do not break your heart.

Remember that you can always approach lenders, fix up an appointment, and talk your way through the deal, and get a loan approved.

What your lenders are interested in is to know and understand if or not you'll be able to repay the loan. And if you are somehow able to paint a better financial picture during a meeting and convince your lender with your words or by showing a projected revenue statement for the coming year, you might get lucky and have your lender fund your loan.

Always remember that there's no need to give up on trying to find a loan for yourself. Try, explore and ask around for best lenders in the market, meet them in person, talk to them about your needs, be honest about your cash flows, convince them of your income flows in the following 10-12 months, re-assure them of full repayment of all your loan liabilities - and in most cases, you won't return empty-handed.

Moving on, here are a few things you should look for in your stated income loan lender:

Number 1 - The clientele of your lender

One of the first things you should look for in your lender would be their clientele. This can also mean the experience. More extensive the client, better it is as you can be assured that the lender has stayed in the market for quite some time and thus, it shouldn't be a scam. Now, checking for clientele could be an easy task if the lender has openly put it up on the website or you might have to ask your lender directly about their experience in providing stated Income loans and the clientele mix they've had in the past.

Number 2 - The loan terms and conditions

The next obvious thing to look for would be the loan terms and conditions offered by your lender. Ask around, compare, and choose the one who's providing you best deals. Remember that best deals needn't necessarily mean deals which are the cheapest. It could mean working with a lender who has a good experience and is also providing reasonable rates, terms, and conditions. Do not make the mistake of blindly going ahead with a lender just because he's offering you the lowest price in the market.

Number 3 - Down payment of the loan

Some lenders lending stated income loans could get really greedy and demand more than 30% down payment. In such a case, take a step back and analyze if it really makes sense for you to purchase that loan. A decent down payment would be 20% of the property value.

Number 4 - Closing costs, prepayment penalties, and other related expenses

Sometimes, the terms and conditions, the down payment, the experience of the lender may all make you want to finalize on a particular lender but do not jump the decision unless you're aware of all the expenses in relation to loan processing. Ask about every single type of payment your lender will want you to incur including but not limited to closing costs, prepayment penalties if any, and other loan processing related expenses like - documentation fees, loan processing fees, and every additional payment related to your commercial real estate loan procurement. Only once you have a clear picture of your overall costs of procuring a loan, finalize your decision about a lender.

Number 5 - Ask for client testimonials

Last up on the list would be the customer testimonials provided. Some borrowers readily put it out on their websites which makes the job easier for you. However, with others who do not, you might have to ask for it politely. There is nothing wrong about wanting to know what the previous customers have got to say about a lender.

Remember checking reviews on Amazon before buying some products or checking reviews about a movie or even a Netflix show? This is no different from those.

In fact, this is even more important because you'll be shelling way more money here. Remember that a genuine and authentic private money lender will have no concerns on this and would be glad to fetch you some customer testimonials.

What's a better way of knowing how excellent service is than ask the ones who've used the service? So, drop your inhibitions and ask for Customer testimonials as the last step to making your end decision.

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Stated Income Loans for Self-Employed Borrowers | Private Capital Investors

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Wouldn't it be amazing if you could get a loan approved without having to provide any income verification or proof of documentation? As a borrower, you might say yes. But as a lender, lending money to borrowers without verifying their income can be very risky....

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Are Stated Income Loans Available For Borrowers? - Private Capital Investors

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Are Stated Income Loans Available For Borrowers? - Private Capital Investors

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Are Stated Income Loans Available for Borrowers?

Stated Income loans are back in the market. This is news that has had many real estate investors jump in joy, especially the ones who are self-employed.

Is it true that the Stated Income loans have made a comeback?

Are they back just like the way they used to be back in the 2000s?

What is the Stated Income Loan Alternatives?

Can borrowers who cannot verify their income avail such Stated Income Loans?

If yes, in what capacity?

Is it finally the time self-employed borrowers can relax now that these loans are back now?

Read on to find out answers to all these questions and more!

Stated Income loans have long been called the "boon for real estate investors". They were on a rise in the early 2000s and the country was flooded with lenders writing off loans to thousands of borrowers every year.

Was it for the good? It was until the housing market crash was witnessed in the US in the year 2008. The Stated Income Loans were indeed among the top reasons responsible for the housing market crash.

Why? The commercial real estate lenders were very generous in writing off loans to thousands of borrowers across the country only based on the income "stated" on the papers without verifying the same with proof of documents.

This led many borrowers who had no consistent income flow to avail loans far too easily. What followed is that thousands of borrowers defaulted in their loan repayments and that was a major reason behind the housing market crash of 2008.

The Frank-Dodd Act of 2010 finally bought some stability to the situation by making stated Income loans for owner-occupied properties illegal.

Bottom-line? It is illegal now for lenders to lend money to borrowers looking to finance owner-occupied properties.

Lenders are now required to fully document and verify a borrower's repaying ability either with income or assets. Thus, the borrowers who cannot back up their income with proof of documents will no longer be able to avail such loans.

Is that bad news to borrowers? Not really. The good news is that these loans are back now with a different name and requirements. These loans are now called Bank Statement Loans or Alternative Income Verification Loans which are essentially like the good old Stated Income Loans with an exception that these loans are not provided based on "Stated Income" but based on the income that can be documented and is verified.

Here is all you need to know about the Bank Statement Loans which is also known as Alternative Income Verification Loans.

The new Stated Income Loans for Self Employed Borrowers

We know the story - Self Employed Borrowers often find it extremely challenging to avail of a loan due to their variable and inconsistent cash flows and stringent documentation requirements.

The Alternative Income Verification Loans or the Bank Statement Loans are the new kinds of Stated Income loans for such borrowers where they no longer have to go around asking for loans with different conventional and traditional lenders or lending institutions.

Lenders who provide Bank Statement Loans or Stated Income Loan Alternative (Alternative Income Verification Loans) use different methods to determine the qualification of a specific borrower to repay a loan.

However, it is interesting to note that such borrowers still need to meet the new ability-to-payback standards that are laid out in the Frank-Dodd Act of 2010.

Other than that, passing the minimum qualification requirements and availing the loan has finally become very easy and is the boon to the self-employed real estate borrowers. It is also useful for borrowers who aren't self-employed but are facing issues with availing of a conventional mortgage.

Bottom-line is that the Bank Statement Loans are the Stated Income Loan Alternative for the new age today and when traditional banks or lending institutions turn their backs on a lender, these new-age Stated Income Loan Alternative is always there for the rescue!

What are the qualifying standards for a bank statement loan?

Bank statement loans do not mean that they're free loans that require no income verification whatsoever. They're much more flexible than their regular conventional loan counterparts but here are a few qualifying standards for a typical bank statement loan.

These standards may vary from one lender to another but in a typical general scenario, here are a few qualifying standards for bank statement loans:

1) Bank statements of the past two years

Most bank statement loan lenders require the borrower to submit the bank statements related to a period of two preceding years. This is done to verify the consistent cash flows if not fixed. The income may be variable and may be highly inconsistent month on month, but at the end of the day, it should have some trend that shows that the borrower has his sources of income sorted.

2) Huge Down Payment

The next qualifying standard for a bank statement loan is a huge down payment requirement. Since these loans are not backed up by any collateral, the lenders would need the borrower to lock in a huge down payment. Generally, the down payment would be 10 to 30 percent of the property value and this may be increased or decreased based on the credit score of the borrower and fulfillment of other requirements.

3) A higher credit score

It goes unsaid that the lenders of Bank Statement Loans require the borrowers to have a higher credit score. It is generally 680+ or 700+ with most lenders and may also increase typically. Conventional mortgages, on the other hand, do not require such high credit scores. The hard money loans too will not require such high credit scores. Thus, this could be one of the cons of choosing a stated Income Loan. But when self-employed borrowers have no other options, these loans are the best fit.

However, note that you may still be able to avail of a Bank Statement Loan even with a poor credit score but you'll be charged a higher interest rate than the usual. Besides, the relationship you have with your lender also determines if you can avail of your loan without having a great credit score. So, the trick lies in asking around and checking with various lenders before you give up in case you have a poor credit score.

4) Higher interest rates

Just like the high credit score, bank statement loans require the borrowers to bear higher interest rates. The simple reason behind this is that these loans are way much riskier than their conventional mortgage counterparts and a high-interest rate is a compensating factor that lets lenders lend in their money by making a fair trade-off.

Best use cases of the new Stated Income Loans

Stated Income Commercial Real estate loans are back in their new capacity now and here are some of the best use cases of these loans, now referred to as Bank Statement Loans:

These loans can be used by borrowers who want to buy rental properties to better their cash flows - Stated Income loans are illegal to be issued to borrowers who want to buy owner-occupied properties. However, if borrowers want to buy rental properties, these loans can be availed.

While flipping a property - Remodeling an existing property and flipping it at a great price is a common business for lakhs of real estate investors. Such investors often fall short of cash while remodeling their properties and these bank statement loans are real saviors in such cases. The money thus borrowed can be paid back by the proceeds of the sale that happens after the remodeling of the property is completed.

When investors do not wish to pass up on an investment property - Real estate business is a great deal about investing in the right properties at the right time.

The timing of making purchases and sales can make or break the deal. There can be cases where an investor does not wish to pass up investing in a particular type of investment property but falls short of capital just when it is needed the most. In such instances, it is super simple to avail bank statement loans which are known to be processed at lightning speeds. It can be used when such investors are expecting a huge cash advance coming their way in a few months.

They are the best go-to loans when all other types of loans have turned their backs on you - Bank Statement Loans are quick to process, simple to verify and come with limited qualifying standards.

When other conventional mortgage loans are not available for a borrower, these new-age Stated Income Loans are the best go-to options. If you're not able to find a loan to fund your finance requirements for any reason, these loans are always there to cover your backs.

These are some of the best use cases of the new age Stated Income Loans. Bear in mind that choosing the best type of financing for your commercial real estate investing needs is one of the most important decisions you will be making and making a wrong choice here can be an expensive one.

Thus, ensure that you're making a fully informed decision with your choice of the loan and hire an expert if you want to be double assured about your decision.

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Are Stated Income Loans Available for Borrowers? - Private Capital Investors

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Stated Income loans are back in the market. This is news that has had many real estate investors jump in joy, especially the ones who are self-employed. Is it true that the Stated Income loans have made a comeback? Are they back just like the way they used to be back in the 2000s?